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Energy Tomorrow is brought to you by the American Petroleum Institute (API), which is the only national trade association that represents all aspects of America's oil and natural gas industry. Our more than 500 corporate members, from the largest major oil company to the smallest of independents, come from all segments of the industry. They are producers, refiners, suppliers, pipeline operators and marine transporters, as well as service and supply companies that support all segments of the industry.

Two new studies commissioned by API illustrate the benefits of the 1995 Deep Water Royalty Relief Act. As we explained on Monday, the act purposefully created financial incentives for drilling in the deep waters of the Gulf of Mexico, and it led to new technologies and huge investments in the production of domestic oil and natural gas.

Today, U.S. Interior Secretary Ken Salazar announced that he would terminate the Royalty-in-Kind (RIK) program, which collected $6.6 billion in oil and gas deliveries in fiscal 2008, and is one of the government's largest sources of non-tax revenue. The program is an effective means of ensuring that the American people receive fair compensation for development of federal resources.

Terminating this straight-forward method of handling royalty payments runs the risk of raising administrative costs and adding additional layers of paperwork required to determine the value of oil and gas production. The Minerals Management Service itself noted administrative efficiencies brought on by the program, and pointed out that another benefit of RIK is the reduction in costly lawsuits tied to product valuation.

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Energy Tomorrow is a project of the American Petroleum Institute – the only national trade association that represents all aspects of America’s oil and natural gas industry – speaking for the industry to the public, Congress and the Executive Branch, state governments and the media.